Earlier this month, the Employment Relations Minister, Ed Davey, told a conference of trade unionists: ‘I like to be evidence-based in the policies that I make.’ Music to my policy wonk ears. But how much evidence is there, exactly, for the policies now being pursued by Davey and his ministerial colleagues?
Well, in most cases, not a lot. And in some cases, none whatsoever.
Take, for example, the proposed increase from £10,000 to £20,000 in the limit on the costs that can be awarded by a tribunal (against a party that has, in the view of the tribunal, acted ‘vexatiously, abusively, disruptively or otherwise unreasonably’). Ed Davey and his Ministry of Justice colleague, Jonathan Djanogly, say the increase is needed to give tribunals ‘the ability to make [costs] awards that can more accurately reflect the true cost to business of defending a claim’. In other words, the current limit of £10,000 is restricting the ability of tribunal judges to award true costs.
If this was the case one would expect to find at least a good proportion of costs awards bumping up against the £10,000 limit. But in 2010/11, the great majority – 78% – of the 355 costs awards made to respondent employers were for less than £4,000, and all but 12% were for less than £8,000. Almost half – 46% – were for less than £1,000. The average costs award (both claimants and respondents) was £2,830, and the median award was just £1,273.
Which is not surprising, because – according to the Ministry of Justice – the average cost to an employer of defending a tribunal claim is £3,700 – that is, considerably less than half the current upper limit on a costs award. Which is not, in any case, a true cap, as costs of more than £10,000 can be claimed, but such unusually high costs claims are assessed by a County Court, not the tribunal. In 2010/11, this marginally different procedure was necessary in just four of the 355 cases of a costs award to an employer, with costs of £83,000 being awarded in one case. So, in practice, there is no limit on the costs that can be recovered by an employer.
In short, there is simply no evidence-based case for increasing the current limit and, as the Government’s own impact assessment notes, any benefit to the tribunal system or the taxpayer of enabling the ‘handful’ of cases that currently go to the County Court to remain within the tribunal system would be ‘too small to be quantified meaningfully’.
Take another example: the increase, from £500 to £1,000, in the upper limit on a deposit order (paid as a condition of being allowed to continue with a claim, or defence of a claim, that a judge has decided has ‘little reasonable chance of success’). Unlike the limit on costs awards, this is a true cap. However, according to the Government’s own impact assessment, over the four-year period between 2007 and 2010 the average deposit order was ‘around £250’, and the maximum of £500 was ordered in only 20% of cases. Moreover, ‘there is no evidence to suggest that employment judges would use the increased cap to make higher orders across the board’. I think that’s worth repeating: ‘no evidence’.
So, again, any benefit to the tribunal system or the taxpayer would be ‘negligible’ – that is, not worth the equally negligible but nonetheless real bother of implementing the change. What is surely far more important is the decision-making of employment judges in relation to when and in what circumstances to make a deposit order.
However, whilst increasing the upper limit on costs awards is unwarranted and would bring no meaningful benefit to the tribunal system or the taxpayer, it would have an adverse impact on vulnerable claimants, the vast majority of whom are unrepresented.
In 2004, a Citizens Advice report set out detailed evidence from the casework of Citizens Advice Bureaux on the all-too-common use by employers’ legal representatives of unjustified costs threats, intended to intimidate workers pursuing relatively low-value tribunal claims into withdrawing their claim. Recent evidence from bureaux indicates that such intimidatory practice remains widespread, and is even routine on the part of some employer representatives.
Evidence free policy
Doubling the limit to £20,000 would undoubtedly strengthen the hand of such unscrupulous employer representatives when seeking to intimidate unrepresented, vulnerable claimants pursuing relatively low-value claims in defence of their basic workplace rights.
Which begs the question: why are Ed Davey, Vince Cable and their Ministry of Justice colleagues pressing ahead with these two evidence-free policy changes? The answer’s not too difficult to fathom, but for the avoidance of doubt it is spelt out in the Government’s response to the consultation: ‘employers, their representative groups [such as the CBI] and their lawyers were clearly in favour’.
Which, sad to say, when it comes to employment law reform, seems to be the only kind of evidence that reaches ministers’ desks and red boxes.
Author: Richard Dunstan
Richard Dunstan is a policy wonk who has worked for Citizens Advice, the National Audit Office, the Law Society, and Amnesty International UK.